Technical View - Sep 24, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
2021-09-26 16:55:59 (Time Zone: IST)
After showing a fine upmove on Thursday, the Nifty shifted again into profit booking mode at the new highs and closed the day higher by 30 points. After opening on an upside gap of 75 points, Nifty made an attempt to move up further in the early part of the session. Intraday profit booking has triggered at the new high of 17947 and the market showed gradual intraday weakness in the mid to later half of the session and closed the day slightly higher. The opening upside gap has been filled completely.
A small negative candle was formed on the daily chart with minor upper and lower shadow. Technically, this action signal a formation of spinning top type candle pattern at the highs. Normally such formations after a reasonable upmove or at the hurdle more often act as a downward reversal pattern.
In the past, few such patterns have been formed during higher bottom formations (as per daily chart- last one month) and the market eventually witnessed a decline of 1-2 sessions before moving up further. Hence, more consolidation or minor weakness is not ruled out in early part of next week. The formation of negative divergence in the RSI/Nifty could be another evidence to call for minor weakness in the market.
Nifty on the weekly chart formed a long bull candle, which has overlapped previous bull candle . This signal that the uptrend as per medium term is intact and any minor weakness of short term is unlikely to have any sharp negative impact on uptrend of the market.
Conclusion: The Nifty seems to have encountered resistance again at the new highs. The overall positive trend remains intact and expected minor weakness is unlikely to damage the uptrend status of the market. Hence, any weakness down to the support of 17600 levels could be a buy on dips opportunity. The near term upside target to be watched around 18200-18300 for the next 1-2 weeks.